The controversial EIP1559 is still in a stalemate, but according to the results of the Ethereum core developers meeting on the 19th of this month, the plan will still be implemented in the London upgrade in July, and the auxiliary EIP has not yet been decided. Most of the global mining pools except F2Pool have expressed their opposition to EIP 1559. The developer community believes that this solution will solve the congestion problem of Ethereum, so it is necessary to implement it.
However, according to the recently released "Ethereum Gas Report" by blockchain data analysis company Coin Metrics, EIP 1559 cannot solve Ethereum's sky-high gas fee crisis.
The report digs into Ethereum transaction fees, noting that fees on Ethereum are still at an all-time high. Ethereum’s median fee has been above $10 for most of 2021 so far, compared to an average Ethereum transaction fee of just $5.70 at the peak of the last bull market (2017/2018).
The report attributed the increase in transaction fees in part to an increase in the price of ethereum itself. Since the beginning of 2021, despite a pullback from its all-time high of $2050, the current price of ETH has risen by 125% compared to the historical period, while the transaction fee price has increased by 532% in the same period!
According to the report, different types of transactions have different gas fees. For example, for automated market makers (AMMs), simple ERC20 token transfers cost much less Gas than complex smart contracts. The report also pointed out that DeFi is not the root cause of the high gas fee of Ethereum, but the increase of total transactions on the chain is the root cause.
The current Ethereum transaction transfer adopts an auction mechanism, and miners will give priority to sending transactions with higher Gas. Simply put, the fee is higher and the transaction speed is relatively faster.
This Coin Metrics report pointed out that the current transfer fee is too high because the block has remained about 95% full, and this situation has not improved since the middle of 2020 and the explosion of DeFi. As of March 2021, Ethereum blocks are 97%-98% full!
Ethereum miners can specify the transactions to be included (into the block) when digging a new block, and because of the upper limit of the block size, each block can only contain a certain number of transactions (about 160 to 200 on average). "So miners will naturally prioritize transactions with the highest Gas bids, and if these transactions can be included (in blocks), they can earn more," the report said.
The EIP-1559 network upgrade aims to change the auction mechanism and burn some fees. The report believes that it is impossible to solve the problem of high gas costs. Only expansion is the long-term solution: "If each block of Ethereum (on average) only If it can handle hundreds of transactions, then as long as the usage of DApp continues to increase, the gas fee will remain high.”
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